Audience

Audience

By the Project for Excellence in Journalism

The audience for what was once called radio is rising — and fragmenting.

Heading into 2008, the big question is which, if any, of the new audio platforms —satellite radio, Internet radio, HD radio, podcasts, MP3/iPod listening or mobile phone radio — will come out on top. So far, no clear winners have emerged.

What we do know about the new technologies is that audience demographics and listening location are closely tied to certain audio devices.

Wealthy and more educated groups tend to gravitate toward satellite radio. Nearly one in four subscribers has an annual household income over $100,000.1

Gadget-savvy younger audiences show the most interest in podcasting. More than half (52%) of those who have ever listened to an audio podcast are under the age of 35.2

Car radio audiences still favor the AM/FM dial (93%), but growing numbers are also using MP3 players (19%) and satellite radio (4%) while they drive.3

Online radio is common in the workplace. More than half (52%) of Internet radio listening occurs there.4

MP3 players and iPods, the clear winners for on-the-go listening, appear to span all demographics.

Cell phones could become a growing factor in portable listening. Already 44% of cell phone owners, more than for any other audio device, said cell phones had a big impact on their lives.5

The implication of all this is that the many audio devices are still in fierce competition for listeners, and for the advertising and subscription revenue that comes with them.

Research into ways to measure new audio’s growing audience has been slow to come together, despite benefits that both the industry and advertisers would likely receive from measuring Internet and HD listeners. No reliable method to capture total audience numbers has emerged. Hopes were high for the Portable People Meter, the long-awaited electronic measurement introduced by Arbitron, the radio ratings company, in March 2007 and rolling out across the country in 2008. Although its potential is considered strong, the technology is off to a troubled and uncertain start.

Broadcast Radio — Impressive Following

Traditional broadcast radio has maintained an impressive following, even among fans of new audio, though the numbers are falling slightly. According to Arbitron, traditional radio commanded a weekly audience of 93.3% of the population 12 and older as of the spring of 2007.6 This translates into nearly 233 million people over the age of 12 who tuned into the AM/FM dial at least once during an average week.7

That number represents a modest drop of 1.6 percentage points since the spring of 2000. The decline is relatively small compared with newspapers, network television and magazines that, like traditional radio, also face competition from new technologies.

And the listening patterns look fairly stable for the AM/FM dial in the foreseeable future. New audio listeners remain loyal to traditional radio. Nearly 8 of 10 podcast listeners (79%) and online radio listeners (77%), according to Arbitron survey data, say they would continue to listen to AM/FM radio as much as they do now.8 The number drops slightly for satellite radio listeners: seven out of ten subscribers anticipate maintaining their current levels of traditional radio listening.

These numbers, moreover, appear to be supported by others. A study by the media research group Bridge Ratings also found that AM/FM radio listening in the car has remained high, at 93% (down from 96% in 2004), despite competition from satellite radio and MP3 players.9 Furthermore, 75% of survey respondents said that traditional radio was the device they preferred to use most in the car.

HD Radio – Too Late for a Breakthrough?

Over the past three years, the radio industry has spent a lot of time and money promoting HD radio.10 But so far, it looks as if that effort has not translated into a radio audience big enough to compete with other new audio platforms. The audience for HD radio in 2007 was estimated to be 320,000 (compared with 13 million satellite radio listeners), up from 100,000 in 2005.11 Though this is a large increase, over 200%, the audience is very small .

The digital HD radio platform also offers features that other popular digital formats offer, such as the ability to record particular programs for later listening (the audio equivalent of TiVo) and providing scrolling textual data on the radio “dial” (like program information, artist/song names, weather/traffic updates).

The biggest stumbling block for rolling out HD radio seems to be access. In order to listen to the high-quality sound and multicast channels of HD radio, consumers have to invest in a radio that receives the special signals. In 2007, a modest HD radio cost about $150. Although that price has dropped significantly over the past two years, consumers still do not seem interested in paying that much for a single radio. Listening to HD radio in two locations – at home and in the car, for instance – would mean buying two units.

The trade-off for the initial high cost of access is that the resulting expanded digital dial is then absolutely free, unlike satellite radio, which comes with a monthly subscription fee (currently $12.95) in addition to the initial cost of the satellite receiver(s).

By the end of 2007, 1,629 HD radio stations were on the air and 466 more were licensed but not yet broadcasting.12 The number of HD stations skyrocketed in 2005, more than tripling from 152 in 2004 to 494. Since then, growth leveled off and has begun to decline. In 2006, 522 new stations were added. And only 394 stations went digital in 2007.

The growth of HD seems to be getting the public’s attention, though perhaps not yet their buy-in. Arbitron reports that more people had heard about HD radio at the beginning of 2007, compared with 2006 (26% vs. 14% in 2006).13 But increased awareness does not necessarily translate into more listeners. Just 29% of the public expressed interest in getting HD radio, down from the previous year’s total of 35%. Though interest is waning, HD radio has more reason to be optimistic about growth than satellite radio: Only 18% of people surveyed were interested in subscribing to satellite radio.

Satellite Radio – Subscriptions Still Up

As the two providers of satellite radio service, Sirius Satellite Radio and XM Radio, await the verdict on their proposed merger, they continued to grow in 2007. But growth may not be enough to sustain either company.

According to company press releases, Sirius ended 2007 with 8.3 million subscribers, up 38% from 6 million in 2006. XM added 1.4 million subscribers, bringing its total to more than 9 million, an 18% increase from 2006.14

Though double-digit growth in audience may seem impressive for satellite radio, especially after only six years on the market, it still has not created a viable business model for either company.

At the outset of 2007, the companies announced their intent to merge, with Sirius Satellite Radio’s CEO, Mel Karmazin, leading the effort. It quickly became a regulatory battle, one still fiercely being waged in Congress at the end of the year. If the two companies are allowed to go forward with the plan, it may be a factor in how radio will be defined in the future – as individual types of competing audio platforms (terrestrial, satellite, HD, online), or as one medium that comprises all forms of listening. (See Ownership.)

Another sign of the uncertain future: Audience growth may be approaching a plateau. According to Arbitron, awareness of both XM and Sirius was almost flat compared with the previous year, 2006.15 In January 2007, 64% of the population 12 years and older said they had “heard of a satellite radio service called” XM radio, while 60% said the same of Sirius. This compares with 61% for both companies in January 2006.

According to the Arbitron survey, interest in satellite radio did not rise in 2007, another threat to sustaining audience growth. In a 2007 survey, only 3% said they would be “very likely” to subscribe to satellite radio services in the next 12 months.16 And 15% said they would be “somewhat likely.” This is nearly identical to attitudes in 2006, when 4% said they would be “very likely” to subscribe as of January 2006 and 14% said they would be “somewhat likely.”

Internet Radio – Stable Audience

The audience for Internet radio,17 which received a big bump in 2006, held steady in 2007.

In Arbitron’s April 2007 survey, 11% of Americans age 12 and older, or 29 million people, reported listening to online radio “last week,” about the same as the regular 2006 audience, 12%.18 And 40% of the population said they had ever listened to radio online. This suggests broad exposure to Internet radio, but perhaps not yet a steady and regular audience.

Though its audience size is far from overwhelming, it still helps offset the steady downward trickle of traditional radio listeners. Of those who had recently listened to Internet radio, 34% said they had heard a simulcast of a traditional AM/FM online station.19 More important, according to the Bridge Ratings Group, this number has gone up 41% from January 2007 to April 2007. Growth may be hindered however by a recent regulatory change that increased royalty fees for online radio providers. ( See Economics section for more details.)

This growth has been noted by some in the industry who believe radio’s digital push should focus on Internet radio rather than HD. John Hinnen, vice president for radio news programming at station CFTR 680 in Toronto, believes we will all be listening to the radio via the Internet in our cars in the not-so-distant future. Speaking to the National Association of Broadcasters in Las Vegas in 2007, he suggested that news programmers offer listeners ways to personalize the news by creating music or news content from a vast menu of options.

That anytime-anywhere philosophy could have growth potential. As of 2007, the majority of Internet radio listening (52%) occurred at work, whereas most traditional AM/FM listeners tuned in from the car.20 But if wireless Internet was more universal, Internet radio could be freed from the computer.

To get some sense of wireless Internet availability, the CEO of American Media Services-Internet, Reed Bunzel and Laramie Guest, the company’s vice president for engineering, drove 100 miles – from San Jose, Calif., to San Francisco and back — in November 2007 while streaming radio from a laptop. They experienced a nearly flawless signal for the whole trip. Bunzel said, “The underlying incontrovertible truth is that Internet radio no longer is tied to a cable and a surge protector. It is just as portable as terrestrial radio, it doesn’t have to appeal to a mass audience, it can be personal and interactive in nature, and almost anyone can join the club.” 21 Whether this extent of steady streaming would be available in other parts of the county is questionable. Still, it does suggest the potential of wireless Internet radio.

The majority of online radio fans tend to listen about 10 to 14 hours a week.22 More than a quarter of Internet listeners (26%) tune in more than 15 hours a week and 12% of that group listens more than 20 hours a week. By comparison, listeners to traditional AM/FM radio spend an average of 19 hours tuned in.23

Podcasting/MP3 Players – Catching On?

The audience for MP3 players continues to grow at a brisk pace. As of early 2007, nearly a third of the American public (30%) over the age of 12 owned an iPod or other MP3 player, up from 22% the previous year.24

Small, sleek and portable, MP3 players were most popular with kids. More than half (54%) of 12- to 17-year-olds owned an iPod or other type of MP3 player at the beginning of 2007, up from 42% the previous year.

But, despite the prevalence of MP3 players, only 13% of people over the age of 12 —some 32 million — say they have ever listened to podcasts, that is, downloaded audio or video other than songs from the Internet for later consumption.

That may have more to do with the process than the content. The two-step process required to hear podcasts — accessing and downloading — may be the reason the digital platform has not caught on. According to Bridge Ratings, the main reasons people skip podcasts are because they just are not interested (46%) or they think it is “too complicated” (39%).25

Not surprisingly, younger audiences showed more interest in the technology. More than half (52%) of those who have ever listened to an audio podcast are under the age of 35.26

Cell Phone Radio – The New Frontier

Some predict that it won’t be Internet radio, HD radio, satellite radio, podcasting or MP3s that take over as the dominant new audio format, but cell phones and PDAs.The potential for cell phone radio to become the next “must-have” audio device is great, but so far, it is slow to take off.

Only a tiny slice of the population – 1% – already has purchased a device that would tune in local radio stations.27 Interest, however, is higher. Nearly one in three people are “very” or “somewhat” interested in having a cell phone with a radio function. But that leaves 65% who have no interest.

Still, the emergence of the cell phone nation is hard to ignore. Over 250 million people, or 82% of Americans, subscribed to some type of wireless service as of November 2007.28 This represents an increase of 352% since 1997. Not only is cell phone penetration high, but most calling plans offer customers substantial incentives to upgrade their cell phones every two years, ensuring a steady turnover of new gadgetry.

And according to the media research group Bridge Ratings, “Cell phone technology is the only audio-capable technology that could approach traditional radio’s market penetration.” 29

Underscoring this potential is how people feel about their cell phones: 44% said the devices have had a “big impact” on their lives.30 (In comparison, iPods come in at 25%).

Source: Arbitron, Edison Media Research
Survey Question: “How much of an impact on your life has (name of platform/device) had? Where 5 = big impact and 1 = no impact

What could this mean for radio? Wish lists from cell phone owners pointed to a demand for information solidly within the realm of radio. The services survey respondents preferred getting most on cell phones (other than phone calls and text messaging) were traffic reports (39%), music downloads (37%) and news/sports (28%).31 Fifteen percent said they were interested in having an AM/FM receiver on their phone, while 12% were interested in browsing the Internet and 13% in watching TV.News on the AM/FM Dial

Like the audience for radio overall, the audience for news, talk and information is holding steady on the traditional AM/FM dial.

The percentage of people who listened to some kind of news, talk or information on their traditional radios during an average week was 16.1% in 2006.32 Of this overall figure, 1.4% listened to straight news on the “all news” format, 2.1% to “talk/personality” radio stations, 2.2% to an “all sports” format, and the largest group – 10.4% – tuned into a mixed format of “news/talk/information.”

Listening to the news continues to be an activity that older Americans prefer. In fact, every cohort except those between the ages 55 and 64 and those over 65 listened to the news less in 2006.

“News/talk/information” tended to be most popular in states in New England and the western regions of the Rocky Mountains and the Pacific Coast, as well as the West North Central and East North Central regions. In each region, the share of listeners to news/talk/information is greater than the national average of 10.4%. There was considerably less interest in the format in the southeastern part of the country, especially Mississippi, Louisiana, Tennessee and Kentucky.

On average, people spent a little over nine hours a week listening to news/talk/information.33 This compared with a national average of 19 hours a week for all radio listening, regardless of format.

Most listening occurred at home (51.7%), followed by the car (34.2%) and work (12.8%).34 This diverged from the overall listening patterns (regardless of format), which were more evenly distributed – 39% at home, 34.8% in the car and 23.8% at work.

The News on ‘New Audio’

Are people using other new audio devices to tune into news and information? Yes, but to what extent is more difficult to answer.

With respect to HD Radio, news and talk dominated the digital dial in 2007, with 330 channels.35 On the AM/FM dial, news is the second-most-programmed format: In 2006, there were 1,503 news/talk/information stations, which were second to country stations at 1,704.36

The predominance of news on HD could be a result of a big push by the Corporation of Public Broadcasting to fund the transition of public radio stations from analog to digital. From 2002 to 2006, the Corporation of Public Broadcasting gave grants to 540 public radio stations for the digital conversion, and in 2006, it announced funding for 85 more stations.37 Because news is such a prevalent format for public radio, the grant program gave a boost to the number of news channels populating the HD radio dial.

Of the 330 news/talk/information stations broadcast on HD radio in 2007, 48 were multicast stations, which is to say they provide an additional news/talk channel new to the AM/FM dial. In a surveyed sample of managers and executives of these multicasting news/talk/information stations, the Project for Excellence in Journalism found the content largely comes from radio networks such as National Public Radio, the BBC, Public Radio International, American Public Media, talk host syndicates or already produced local content.

Many of those surveyed hoped to introduce unique local content, but lack of revenue is a shared obstacle. ( See Economics section for more details.) But immediate profits aside, the consensus was that HD radio is an investment worth making to build audiences.

For listeners who like to take their programming on the go via podcasts, the content most desired for downloading was news and commentary about technology. Coming in second and third were national news and local news/public affairs. Tech-savvy folk use their MP3 players to keep up on current affairs.

Interest in newsy podcasts also was reflected in the amount of programming available. According to Podcast Alley, which tracks podcast content and trends, of the 37,388 podcasts as of January 2008, some 993 were about news and politics.38 And of the top10 podcasts tracked in January, half focused on news and politics.

When listeners tune in to public radio, news, generally, is what they want to hear.

These 32 million listeners tune in to stations providing content from public radio networks all over the country – such as National Public Radio, American Public Media and Public Radio International – and in eight formats.39 The format leader, by audience, is news/talk, followed by news-classical, classical music, jazz, news-music, adult album alternative /eclectic, news-jazz and variety music.

Nearly half of the audience share of public radio (43.6%) tuned in to the news and information format in 2006, the most recent year for which there are data.40 This is down slightly from the previous year (44.8%). Mixed news formats also command a major segment, adding to the overall influence of news. News-classical music, for instance, picked up 21.1% of the audience.41

News/talk audiences tend to be older, educated and affluent. Two-thirds (67.7%) are at least 45 years old, nearly three-quarters (71.6%) are college graduates and 52.6% have a household income over $75,000.42 The audience is nearly evenly split between male and female, although males show a slight preference for news/talk – 52% are male and 48% female. In contrast, commercial news/talk/information listeners are more male (56%), less educated (43.5% have college degrees (still a good deal higher than the 27% of the public over all) and less affluent (39.4% have incomes over $75,000) than public radio news listeners.43 Both public and commercial news radio audiences, however, tend to be older, with 70% of commercial news audiences at least 45 years old.

According to Adam Clayton Powell III44, a former news radio executive now at the University of Southern California, “Demographics of all-news radio are largely a function of its largely being a format on the AM band. When KSL and WTOP switched all-news from AM to FM, with identical programming, the average age dropped ten years.” The first station is in Salt Lake City and the second is in Washington, D.C.

Also, public radio, cognizant of aging audiences, has been working on ways to attract younger listeners. NPR began a new news program called “Bryant Park Project,” which appealed to younger audiences. ( See News Investment section.)

Source: Arbitron, “Public Radio Today, How America Listens to Public Radio,” July 12, 2007, and Arbitron, “Radio Today: How Americans Listen to Radio, 2007 Edition,” April 13, 2007

Public radio news/talk listeners stretch across the country. Of the eight regions that Arbitron identified, the Pacific region of California, Oregon and Washington commanded a quarter of total public radio news/talk listening and tallied the highest average listening share of all the regions, 11.3%.45 Second was the Middle Atlantic region (8% share), followed by the South Atlantic (6.9% share). The South Central region, from Texas to Mississippi and up to Kentucky, had the least interest in public radio news/talk (2.1% share).

Age was the determining factor in how much news/talk radio was consumed in 2006, consistent with the previous year. Listeners aged 12 to 24 years old tuned in only 3.5 hours a week, while that number nearly doubled for those aged 25 to 54 (6.5 hours a week).46

As in years past, listeners spent less time per week with public news/talk than commercial news/talk in 2006. Commercial radio’s news/talk stations are heavy on the more popular talk format, as opposed to public radio fare that leans toward a longer and more analytical news reporting style. Also, public radio often repeats news programming – for instance, one NPR news program, “Morning Edition,” airs for two hours before repeating content, while the conservative pundit Rush Limbaugh, on the commercial dial, offers a three-hour program of original, personality-driven commentary every day.

Source: Arbitron, “Public Radio Today, How America Listens to Public Radio,” July 12, 2007 and Arbitron, “Radio Today: How Americans Listen to Radio, 2007 Edition,” April 13, 2007

New Audience Measurement: The Portable People Meter

After years of research and field testing, the Portable People Meter — a new passive electronic device for measuring radio audiences — finally has been put in place in select markets. The new audience measure was rolled out in 2007, starting in Philadelphia in March, followed by Houston in June.

Issued by Arbitron, the radio ratings research group, the new audience measure replaces the manual method of diaries, in which panelists were asked to keep a written log of their radio use for each day. Instead of asking participants to record their listening habits, the electronic version captures them passively via a small electronic device that users carry with them throughout the day. The device detects inaudible codes that are hidden in broadcast streams and reports them to Arbitron at the end of the day. The broadcast codes identify the station and have the potential to distinguish between regular AM/FM stations, HD radio channels and even Internet streams.

Satellite radio is not yet encoded and cannot be measured by the Portable People Meter.

There are clear benefits, which is why nine out of ten top radio owner groups have opted to use it. The device can draw from a larger sample size, which leads to more stable measurements. And it measures children aged 6 to 11, while diaries measured only age 12 and older. Also, because the measurements are electronic, the data can be released much more quickly.

Arbitron expects all top-50 radio markets will turn audience measurement over to the Portable People Meter by the end of 2010.

So far, the electronic ratings measurement device is off to a rough start.

Early results from Philadelphia, Houston and New York have shown sharp rating declines for younger listening audiences and minority groups, especially African-Americans and Hispanics, compared with results from the paper diaries. Since these ratings measurements affect advertising rates, such declines could reduce revenue for radio stations that appeal to such audiences. James Winston, executive director of and general counsel of National Association of Black Owned Broadcasters, said, “Defective ratings information being spread by Arbitron is more than a business crisis for African American and Hispanic station owners. It is a civil rights crisis for all of America.” 47

In mid-November, leading broadcasters such as Clear Channel, Cox Radio, Cumulus Media and Radio One sent a letter to Arbitron to assert their dissatisfaction with the people meter results, asserting that the “PPM has not provided accurate or reliable data for all demographic groups” and saying that “the number of people participating in the PPM survey must be increased.”48 The root of the problem was that Arbitron failed to attract sufficient representation from young (18- to 34-year-olds) and ethnic demographics, which skewed audience ratings downward for stations that appeal to such groups.

In response to these complaints, Arbitron announced at the end of November 2007 that it would delay introducing the Portable People Meter in the nine markets it was expecting to launch in late 2007 and 2008: New York City, Nassau-Suffolk Counties in New York, Middlesex-Somerset-Union Counties in New Jersey, Los Angeles, Riverside, Calif., Chicago, San Francisco, San Jose, Calif., and Dallas. In announcing the decision, Arbitron’s CEO, Steve Morris, said, “We remain confident in the audience estimates that the Portable People Meter service is producing. However, over the past three weeks, feedback from our customers, the Media Rating Council and other constituencies has led us to conclude that the radio industry would be better served if we were to delay further commercialization of the PPM in order to address their issues.”49

Morris also said that Arbitron would use the time granted by the delays to focus on how to improve sample sizes and meter compliance among the 18- to 34-year-old group, especially young ethnic adults.

6. Arbitron, “Persons Using Radio Report,” Cume Rating Monday-Sunday 6 a.m.-midnight: http://wargod.arbitron.com/scripts/ndb/ndbradio2.asp .This figure is based on what Arbitron calls “Cume,” which is the number of people who tuned into radio at least once and at least for five minutes in an average week

10. HD radio is a digitally broadcast radio station that has the potential for much greater clarity of sound than that of traditional analog radio. But even more powerful than improved sound quality is the capacity for HD radio stations to multicast, in other words, allowing a regular analog station to simultaneously broadcast up to three separate radio channels, each with different content, without sacrificing the quality of any of the stations’ signals. (Technically, stations could broadcast more than three at once, but the sound quality then begins to diminish.) In effect, this greatly expands the radio dial. These channels can either be a duplicate of the analog station or brand new HD-only channels.

13. Arbitron, “The Infinite Dial 2007: Radio’s Digital Platforms,” April 19, 2007. Only 6% of people are very interested in getting an HD radio, and 23% expressed that they were “somewhat interested.”.

17. Internet radio is any music or information that can be streamed online from a traditional radio station or from online audio content providers, such as Pandora or iTunes, from international broadcasters or even from someone’s basement.

36. Arbitron, “Radio Today: How Americans Listen to Radio, 2007 Edition,” April 13, 2007. Because formats can be defined differently, Inside Radio found different format totals, but the same conclusion: the total number of commercial country stations was 2,019 and the total number of commercial news/talk stations was 1,324 in 2005-2006.

44. Adam Clayton Powell III is currently the provost for globalization at USC. Formerly, he was vice president for news at NPR, head of network radio news operations at CBS and news director of all-news WINS in New York City.

45. Arbitron, “Public Radio Today, How America Listens to Public Radio,” July 12, 2007. Based on Average Quarterly Hour Share.